SprinkleBit Raises $10M, Relocates from San Diego to New York
SprinkleBit, a social networking platform for stock trades founded in San Diego at least five years ago, has raised $10 million in new funding from GTC, a newly formed private equity firm in Baku, Azerbaijan, according to founder Alexander Wallin.
The deal will allow SprinkleBit “to exponentially grow our user base and generate some substantial cash flow,” Wallin explained in an e-mail yesterday. SprinkleBit, which currently has 13 employees, also plans to move all of its operations to New York City, and plans to add another seven staffers there.
The decision to relocate was based mostly on “operational efficiency,” Wallin wrote. “The market opens [at] 6:30am PST and it’s hard to be prepared, but the most important point is our increased presence in Europe. We need to have more hours overlapping to conduct scrum meetings, etc.”
In an interview just over a year ago, Wallin said one of SprinkleBit’s unique features was the Value Prediction Index (VPI) that he developed as an undergraduate at UC San Diego. The VPI algorithm uses recent stock trades made through SprinkleBit to score each stock based on whether the user community thinks its price will increase. Each user also gets scored according to how accurately they predict future prices.
Initially, SprinkleBit operated mostly as a Web-based social network for sharing stock tips, educating investors, and crowd-sourcing investor insights. The startup is not a securities broker dealer, and began to offer users access to brokerage services in late 2014 through a trading platform operated by Equinox Securities.
Over the past year or so, SprinkleBit has expanded into Europe, improved its Web design, added premium services for paid subscribers, and most recently, launched an instant messaging “chat” service. The company now has about 10,000 users in the United States and abroad.
Wallin said he connected with GTC through a Swiss banker “who has been looking for a SprinkleBit for a while and really liked it.”
Wallin said GTC is owned by investors from Baku, Geneva, and London. GTC is in its IPO process and will be listed this month on the Baku Stock exchange (BSE), and plans to be listed in Hong Kong (SEHK) and Frankfurt (FWB) exchanges later this year. “The Baku stock exchange (BSE) is among the fastest-growing stock exchanges in Europe,” Wallin wrote. The “BSE attracts a lot of capital made from the old oil industry which has lead to an increased interest among European companies to be listed there.”
The $10 million brings SprinkleBit’s total funding to $13.7 million, and will be allocated over the next six months, Wallin said. The capital will enable the company to start a marketing campaign, “as our platform is fully operational on both iOS and the Web with social, education, premium, and brokerage all playing together,” Wallin wrote. “Additional funds will be spent on growing our [developer] team to include Android as well.”
He predicts “SprinkleBit will connect millions of people around the world and aims to become their one stop shop for all investing related activity, including; discussing, learning, and investing. We showed some really impressive numbers last year with a median [investment] return of 35 percent among our community, while [the] S&P 500 traded flat.”